Category: News

Tax Status of corporations incorporated under the Nevis Business Corporation Ordinance and the Nevis Limited Liability Company Ordinance

Positive tax news out of Nevis.  Finally there is some news regarding taxation in Nevis, and the news are seemingly very good.

As a part of our long-term commitment to keeping you informed about all legislative changes in the Island of Nevis and worldwide, we would like you to take note of the following information on Nevis Taxes on corporations and LLCs.

The Nevis Island Administration has received a firm commitment from the Federal Government that it will amend the Income Tax Act, Cap 20.22 by September 2020 to provide a clear definition of tax residency which is based on central management and control.

Corporations and companies (entities) that have central management and control in the Federation of St. Kitts and Nevis will be subjected to Corporate Income Tax on their worldwide income.

If an entity does not have central management and control but is operating as a Permanent Establishment (PE) in accordance with the guidelines of the OECD Model Tax Convention then that entity will be liable to pay Corporate Income Tax on income generated within or remitted to the Federation.

If an entity has neither central management and control nor a PE, that entity is not liable to pay taxes in the Federation. If it is not liable to pay taxes to the Federation it does not require a tax number. “That would apply to over 99% of companies formed in Nevis,” according to KW Wessell, a leading offshore incorporation specialist. “U.S. people, however, are subject to tax on their worldwide income,” he adds.

The NIA, as an interim measure while we await the completion of the amendment to the Income Tax Act and the development of the Simplified Tax Return for the reporting of taxable income, has decided to defer the filing and payment of Corporate Income and Withholding Taxes which would have become due and payable on April 15, 2020.

Further communications will be issued following the finalization of these two matters.

All entities registered under the NBCO and the NLLCO must remain in good standing with the Financial Services Regulatory Commission – Nevis Branch, having paid all applicable annual renewal and licensing fees at the due and payable dates.

We would also like to draw your attention to the fact that more complex structures such as Trusts will remain zero tax vehicles into the foreseeable future, so we would gladly provide a consulting to you with regards to the possibility of changing corporate structures into trusts, and other relatable questions.

Isle of Man Trust and Company – a “Has Been” Jurisdiction

Historically, Isle of Man companies and trusts were the most popular asset protection and structures available. In 1958 the Isle of Man got out from underneath UK control. In 1961 the Isle of Man abolished the surtax, making it a so-called “tax haven.” In 1973, Isle of Man became a popular banking center. With the Trustee Act 1961, Variation of Trust Act 1961 and Perpetuities and Accumulations Act 1968, Isle of Man trusts became popular.

With Nevis Business Corporation Ordinance 1984 and the Nevis Limited Liability Company Ordinance, which was first passed in 1995, Nevis laws were far superior in asset protection and privacy over its IoM counterpart.

The Cook Islands International Trusts Act was originally established in 1988. It had a one to two year statute of limitations on fraudulent conveyance. Fraudulent conveyance must be proven beyond reasonable doubt. This means that when you transfer assets into a Cook Islands trust, it is extremely difficult for a creditor to challenge the transfer.

Nevis and Cook Islands Far Surpass Isle of Man Laws

Isle of Man entities are extremely expensive. They have inferior laws to Nevis and Cook Islands.

Moreover, the due diligence procedures in the Isle of Man are almost torturous. That is, after submitting the initially required documents, there are usually two or three more rounds of “now we need this,” “now we need that.” In the end, our customers are angry and frustrated.

So, we strongly discourage Isle of Man due to inferior laws, punishing due diligence procedures and extreme expense. Do not set up an Isle of Man trust or company. Opt for a Cook Islands trust and a Nevis LLC instead.